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Why India’s 20% club loves the status quo

We Indians are peculiar. At least 40 per cent of us have barely benefited from Independence. Another 40 per cent have benefited only somewhat. This skewed income profile pulls our per capita income down to $1,820 (current 2017), close to the bottom at number 173 out of 229 economies (World Bank 2017).

The real beneficiaries of independence and economic growth

The top 20 per cent have benefited enormously from growth in India’s wealth, economic power and international political clout. If 80 per cent of the bottom population is excluded, the per capita annual income for the 20 per cent club would be around $7,000 (current 2017), equal to the average current per capita income of emerging economies in Europe and Central Asia.

Low citizen expectations and a history of self-reliance buttress the rule of the top 20%

Why then is there a near universal acceptance of the status quo? Put it down to the permanently disabling legacy of autocratic rule — continuing through the Mughals and then the British. The vast mass of Indians are not socialised to expect their ruler to care about them beyond giving a patient hearing to those who “ring the distress bell”, and sometimes kindness and help doled out as noblesse oblige — the obligation of the French aristocracy prior to the 1789 Revolution, to share the crumbs from their pastries with the starving masses.

This is why poor Indians think nothing of collecting the body of a relative who has died in hospital, bundling it up in a durry, shouldering the burden and walking back to their village to give the departed a semi-decent funeral back home. There is no rage against the system which often callously allows the disadvantaged to die. There is no expectation, from the cars and trucks whizzing by, including government vehicles, to stop and help. It’s a private matter and the family alone must bear the burden. This robust self-help mindset shows how independent are the lives of 80 per cent of Indians from the State.

What about the top 20 per cent? The expectations are higher here and sometimes expressed in passive support for urban, public outrage — Nirbhaya, citizens against corruption and #MeToo are good examples. But the depth of the rage is always moderated by the acknowledgement, once the heat has been let out, that radical change could damage the accoutrements of privilege these 50 million families — employed in the formal economy, running businesses or with large agricultural land holdings — have accumulated.

For mainstream politicians challenging the status quo is a self-goal

Arvind Kejriwal was the first politician in 2013 — other than the Communists who had thoroughly discredited themselves by ruining West Bengal over their 34-year rule — who challenged the status quo and unleashed public expectations of rapid change. But this was localised to Delhi.

Prime Minister Narendra Modi, an astute political student, was the first to template a scaled-up model of guaranteeing impossible public expectations in exchange for votes. Mr Kejriwal, an IIT graduate and a former government official, had to simulate an affiliation with the bottom 80 per cent of India. Narendra Modi embodies the spirit of the underdog Indian — poorly educated, with provincial roots and wedded to traditional social norms — most particularly a deep public attachment to religion. His call to change India resonated with the public in 2014.

But hubris set in quickly. Little thought was given to smashing the insidious links between growing private wealth and public deprivation. Change, with the brakes fully pressed, has been shallow. What could radical change in the public interest have looked like? Here are three examples.

Three examples where radical change could alter India’s political and economic landscape

Make the winning margin of votes more than one half of votes caste

First, it sounds ridiculous, that in an intensely heterogeneous society, a party should be able to rule the nation with a minority of the votes cast. This needs to be changed via a constitutional amendment, to require each winning candidate to get at least a simple majority if not two-thirds of the votes cast. This change can ensure that electoral campaigns, public debate, public capital allocations and government recruitment for jobs become fairer and more inclusive. Even this may be inadequate.

Consider the just-concluded Kashmir local elections, where barely anyone voted. That no party propagates such changes speaks volumes about the self-serving, status quoist agenda of the 20 per cent club.

Regulatory practise should discourage preferential rules for quasi government companies and banks

Second, “status quo” has indelibly seeped into our regulatory practices. Consider that the Infrastructure Leasing and Financial Services Ltd (IL&FS) default happened nearly two months ago. Redress should have been swift. But the National Company Law Tribunal refused to accept a mandate to act on October 12, 2018. IL&FS is neither fish nor fowl, regulated somewhere between the Companies Act and the RBI Act. The appellate tribunal is considering whether the Insolvency and Bankruptcy Code (IBC) applies to it. A further appeal to the Supreme Court is possible.

This sounds suspiciously like a ruse to kick the can down the road beyond the 2019 elections, when government entities will take over the subsidiary companies. Even their creditors — all part of the 20 per cent club — would love this, because they would then be able to socialise their losses courtesy public funds. But it disadvantages the needy bottom 80 per cent of Indians, while shielding the greedy 20 per cent club from bearing the consequences of their actions.

Oversight over RAW, IB, CBI and CVC should be with a committee of Parliament and the CJI.

Third, and much more recently, the Supreme Court had used the ploy of “status quo” to cool the heat between warring factions of the Central Bureau of Investigation and reserved for itself all significant decisions going forward. Justice R.M. Lodha’s “caged parrot” has evolved into a “jailed parrot”. The Central Vigilance Commission and the CBI have discredited themselves. Far better to remove wholesale all the senior officers on deputation and rebuild the CBI from ground zero.

Officers of the IAS piously point fingers at the CBI, to illustrate the consequences of diluting their influence at the top echelons of the government. The CBI is #IASmukt, as is the CVC, whose commissioners are former income-tax, police and bank officials.

The good news is that none of this will determine how the people will vote. The bad news is that even if the government changes in 2019, it’s unlikely to do anything differently. We seem to be permanently stuck in a low-level equilibrium of inequity and growth.

Adapted from the authors opinion piece in The Asian Age November 3, 2018 http://www.asianage.com/opinion/columnists/031118/why-indias-20-per-cent-club-loves-the-status-quo.html

Published by Sanjeev Ahluwalia

Sanjeev S. Ahluwalia is currently Advisor, Observer Research Foundation, New Delhi and an independent consultant with core skills in economic regulation, institutional development, decentralization, public sector performance management and governance. He is an Honorary Member of the TERI Advisory Board and a Honorary Member of the CIRC Management Committee. He was a Senior Specialist with the Africa Poverty Reduction and Economic Management network of the World Bank for over seven years, 2005-2013. He has over a decade of experience at the national level in the Ministry of Finance, Government of India as Joint Secretary, Disinvestment from 2002 to 2005 and earlier in the Department of Economic Affairs in commercial debt management and Asian Development Bank financed projects and trade development with East Asia in the Ministry of Commerce. He was also the first Secretary of the Central Electricity Regulatory Commission from 1999 to 2000. He worked in TERI as a Senior Fellow from 1995 to 1998 in the areas of governance and regulation of the electricity sector and institutional development for renewable energy growth. Previously he served the Government of Uttar Pradesh, India in various capacities at the District and State level from 1980 onwards as a member of the Indian Administrative Service. His last job was as Secretary Finance (Expenditure management) Government of UP from 2001 to 2002. He has a Masters in Economic Policy Management from Columbia University, New York; a post graduate Diploma in Financial Management from the Faculty of Management Studies, Delhi University and a Masters in History from St. Stephens College, Delhi.
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